BMRI - Strong earnings ’23, ‘24F likely to continue

KBVS Update
Thursday, February 1, 2024

BMRI: Strong earnings ’23, ‘24F likely to continue
(Maintain BUY; TP: IDR6,650)

•    BMRI earnings were 33.7% yoy, mainly driven by solid growth in PPOP (17.3% yoy) and a sharp drop in provision (37.1% yoy). On a quarterly basis, PATMI grew much stronger by 15.6% qoq and 52.1% qoq, driven by lower provisions (34.1% qoq, 76.7% yoy). All in all, ’23 earnings were way above ours and the street forecast at a run rate of 110%/114%.

•    Loan growth came in at a very strong rate of 16.3% yoy, beating the above industry (10.4% yoy), banks under our coverage (12.2% yoy), BMRI guidance (10–12% yoy), and our ‘23F loan for BMRI (11.2% yoy). The sturdy loan growth was triggered by 4Q23 solid loan demand from the corporate and commercial segments, which grew by 18.3% yoy and 21.2% yoy, respectively.

•    We like the overall ’23 result, which includes BMRI’s key metrics, which continue to fall within ’23F management estimates, with improved CoC and a healthier NPL. We believe the ‘24F loan growth guidance within the range of 13–15% yoy is likely to be achieved, backed by higher yield segments. The bank expected NIM and CoC to hover within 5.3-5.5% and 1.0-1.2%, respectively.

•    At this stage, we continue to like BMRI. Our call on the stock has given a 1YR return of 33.0%, and at yesterday's closing price, our TP (IDR 6,650) has been achieved. Hence, we will revisit our model to accommodate BMRI’s ’23 breathtaking result. Maintain BUY with DDM TP of IDR6,650 (pegged at 2.4x ‘24F P/B) while currently trading at 2.4x ‘24F P/B, or slightly above its +2SD historical mean.

Regards,
Akhmad Nurcahyadi, KBVS Research Team